Sterling has stayed near record lows against the euro, while the dollar fell on talks about possible US rate cuts and car industry bail-out scepticism.
Analysts predict the Federal Reserve will announce interest rate cuts on Tuesday after a two-day meeting.
Meanwhile, the pound was put under new pressure as a survey showed another sharp drop in UK house prices.
The dollar fell to $1.3465 against the euro and $1.4983 against the pound, Sterling was at 1.1128 euros.
Bail-out factor
The dollar declined on Monday as the US government said it might use money intended for banks to help carmakers.
Some analysts think that if the plan is implemented, the financial sector will have less funds to spend if needed.
"An interim bail-out plan for US automakers by the Bush administration is certainly weighing on the dollar, with many being sceptical as to how the industry can cope in the longer term and instead thinking that letting the market take its course would be a preferred route," said currency analyst James Hughes at CMC Markets.
The euro was supported by suggestions from European Central Bank officials that interest rates in the eurozone might not fall too much further.
Interest rates are at 2.5% in the eurozone, compared with 2% in the UK and 1% in the US.
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